Pristine Jewelers NY, Inc. v. Broner

Background

Pristine Jewelers NY, Inc. sells jewelry, including custom jewelry. The dispute involved jewelry sold in October and December 2017 for Adrien Broner. The purchase documents listed the customers as “Adrien Broner/About Billions LLC.”

Ravone Littlejohn was About Billions, LLC’s chief executive officer and only employee at the relevant times. He was an authorized signer on About Billions’ PNC Bank account. In October 2017, Littlejohn gave Pristine two post-dated checks drawn on that account: one for $540,000 and one for $300,000. In December 2017, he gave Pristine two more post-dated checks, each for $200,000. The checks displayed About Billions’ name but did not state that Littlejohn was signing in a representative capacity, such as by identifying himself as an agent or using his title.

The $540,000 and one $200,000 check were deposited and dishonored for insufficient funds. Pristine did not deposit the other two checks after being told there was not enough money in the account. Pristine later settled with Broner and About Billions. The court had previously approved that settlement and dismissed Pristine’s claims against those defendants. Pristine continued litigating against Littlejohn. The parties agreed to try the remaining claims using deposition transcripts and exhibits instead of an in-person trial.

Claims addressed

The court addressed Claim Five, personal liability on dishonored checks, and Claim Six, fraudulent inducement. The court treated Pristine’s other asserted claims against Littlejohn—goods sold and delivered, account stated, quantum meruit, dishonored check, attorney’s fees, and contractual interest—as abandoned because Pristine did not address them.

Personal liability on the checks

Pristine relied on Section 3-403(2)(b) of New York’s Uniform Commercial Code. That provision can make an authorized representative personally responsible for a negotiable instrument when the instrument identifies the represented organization but does not show that the signer acted in a representative capacity, unless the signer proves a contrary agreement, understanding, or course of dealing with the other party.

The court found that Littlejohn was an authorized representative, that he signed all four negotiable checks in his own name, and that the checks identified About Billions without showing that he signed as its representative. Under New York law, Littlejohn had the burden of proving that Pristine knew or understood that he was undertaking responsibility only for About Billions.

The court found that Littlejohn did not meet that burden. There had been only two transactions between the parties, so there was no established course of dealing showing that he signed only for About Billions. The court credited testimony that Littlejohn signed because he was giving the checks and would be “taking care of” the bill. The court also considered the Rolex watch that Pristine gave Littlejohn in connection with his agreement to take care of the payment. That evidence supported the court’s finding that Pristine understood Littlejohn, as well as Broner, to be standing behind the payment obligation.

The court rejected Littlejohn’s argument that the checks were understood to be payable only from Broner’s future boxing proceeds. It found that the checks were unconditional promises to pay, regardless of the eventual source of the money. The court therefore entered a verdict for Pristine on Claim Five.

Fraudulent inducement

Pristine claimed that Littlejohn fraudulently represented that Pristine would be paid, including by providing post-dated checks that allegedly implied payment would be available on the specified dates. Under New York law, fraud required a material false representation, an intent to defraud, reasonable reliance, and resulting damages, all proven by clear and convincing evidence.

The court found that Pristine did not meet that standard. Giving a post-dated check, by itself, was not evidence of fraud. The record did not establish that Littlejohn knew in October 2017 that the checks would not be honored. The evidence concerning the December checks was closer, because the fight expected to generate the payment was delayed, but the court found the evidence ambiguous and insufficient to show either a false representation, reasonable reliance, or an intent to defraud. The court also found no sufficient evidence that Littlejohn knew, or was reckless in failing to know, that the checks would not be honored when presented.

Disposition

The court entered a verdict for Pristine on Claim Five and for Littlejohn on Claim Six. It directed the parties to meet and confer about a proposed form of judgment and to file a proposed judgment by October 29, 2021.